The investor behind HiTea.
Editor’s note: This article from the micro-channel public number “VCPE Reference” (ID: vcpecankao), of: Diudiu tube.
After fading out of Robust, He Boquan was silent for a while. When he left the arena again, he changed his status and became an investor.
In the beginning, he just went to help the desperate old subordinates, but he didn’t expect to start his angel investment path from this.
His most famous investment case recently is Hey Cha. Writing “Why is the sky map behind Nayuki?” “I mentioned that an important early investment of HiTea came from IDG Capital. IDG Capital was actually brought by He Boquan.
Nie Yunchen, the founder of HiTea, has a friend who is a host. This host is nicknamed the Observatory. He has done many shows and has a wide network of contacts. He felt that Xicha lacked an opportunity. As long as he could push the project to He Boquan’s eyes, he would definitely be favored by He Boquan.
Under the recommendation of the observatory, Nie Yunchen met with He Boquan to explain his business plan. Nie Yunchen also invited him to visit the nearby Xicha site.
He Boquan quickly made up his mind and wanted to invest. He not only voted for himself, but also brought IDG capital to join the game. In 2016, He Boquan and IDG Capital invested 100 million in HeyTea. This is the first investment made by HiTea. With the blessing of capital, Hey Tea went out of Guangdong and began to open stores across the country.
It is said that He Boquan’s suggestion that Hey Tea settled in Raffles City, Shanghai People’s Square. Customers buying Hey Tea lined up in Raffles City. The longest waiting time was more than 6 hours. A cup of 20 yuan milk tea was fried to 100 yuan by the scalpers. The long lines let more people come here. Hi tea is popular all over the country.
Before, I wrote about another angel investor, Gong Hongjia (for details, see “Investor Gong Hongjia Doesn’t Say Martial Virtue”). Angel investors’ approach is often to go deep into the industry + take themselves as a method and practice them. Every investor has their own standards for how much they participate.
How did the standard come about? It is done many times, and in the successful cases, the methodology is refined; in the failed cases, the methodology is calibrated and summarized.
When he left Robust, He Boquan was unwilling and even felt that it was a failure, but at this time he had already started his second road, investing in Jiujiuya, Nine Diamonds, Seven Days Chain Hotel, Ikang Guobin, and Hey Tea Wait. He Boquan understands consumer products, and only invests in consumption. He guards his familiar fields, digs deep, and finds the most suitable people in his network to invest.
Curtain Call Robust
He Boquan, from Robust’s curtain call, is tragic.
On the afternoon of November 30, 2001, Robust held a special meeting. Danone’s headquarters announced the acceptance of He Boquan and Yang Jieqiang, Wang Guang, Li Baolei, and Peng Yan.The decision of the five founders of Finland to resign collectively.
As soon as the decision came out, the venue suddenly became commotion. Even He Boquan himself felt rushed, which was a year and a half earlier than the time he had agreed with Danone to leave.
He Boquan took the microphone and said: “Because our understanding of Robust’s future development strategy and the controlling party Danone have a serious disagreement, in order to respect the decision of the major shareholders, five managers, including myself, made a collective resignation. Decision. I hope that Robust employees will face the earthquake with a positive attitude and take positive actions to grasp the learning and development opportunities brought by this change. Under the leadership of the new general manager, Robust will be brought into a new Development stage.”
After speaking, He Boquan choked up, and the venue was silent. When the other four entrepreneurs saw this, they came to the stage and sang the song “Friends” with He Boquan.
Twelve years ago, He Boquan, 28, invited like-minded youths like Yang Jieqiang, Wang Guang, Li Baolei and Peng Yanfen to jointly raise 960,000 yuan to establish Zhongshan Robust Healthcare Products Co., Ltd.
In just 3 years, Robust has developed into an enterprise with more than 10 subsidiaries distributed all over the country. In 1999, Robust’s revenue reached 2 billion.
In 2000, He Boquan sold Robust to Danone for 19.7 billion, shocking the whole country. In 2001, He Boquan withdrew from Robust.
How brilliant the past was, how lonely today are. They reluctantly left the company and have never had anything to do with Robust.
Angel Investment Road
He Boquan’s starting point for investment is actually arbitrary, just to help.
He Boquan traveled to the United States after far away from the rivers and lakes, and worked as a visiting scholar at Harvard. During this time, he and Duan Yongping will call to talk about investment.
Their circumstances are somewhat similar. Duan Yongping also left his backgammon to settle in California. Around 2001, Netease stock had fallen below US$1, and Duan Yongping began to buy in large sums. He Boquan almost planned to follow. As a result, the two of them did not see the result due to heavy snow at the airport.
Before finishing his studies at Harvard, He Boquan specially visited a famous American entrepreneurship professor and told him that he wanted to invest after returning to China. He asked the professor any advice, and the professor said three things:
First, don’t intervene too much, get out as much as possible. Don’t give orders just because you have experience, and don’t let yourself become a manager, otherwise the entrepreneur will lose the ability to judge and rely heavily on you. In the end it is likely that everyone gets lost together.
Secondly, if the invested company fails, don’t take it over and do it yourself. That would only get out of the track of investors.
Third, when the performance is not good, you must have the courage to deal with him. You come from a business background, and you tend to have sympathy for entrepreneurs. Unlike ordinary investors, you can make a ruthless substitution. He Boquan thought for a while and found that the third one was more difficult.
In mid-2003, the deadline for He Boquan’s visiting scholar was approaching. He has not yet decided which field he is good at. So I wanted to go back to China to see what the old subordinates were up to.
He went to Shanghai first to meet Robust’s old colleagues for dinner. During the meal that day, everyone was very happy and told a lot of jokes.
He Boquan keenly noticed Gu Qing’s changes. Gu Qing dressed sloppily, as if she had changed herself.
Gu Qing was the first group of college students brought in by Robust. He first became the deputy general secretary, and then went to the Hubei district of Robust as a marketing manager. He left in 1999.
In June and July 2002, Gu Qing raised 500,000 yuan from a friend, rented a 500-600 square meter factory in Putao District, Shanghai, and started his own business.
Gu Qing has a long history of favoring duck necks. Gu Qing worked at Robust for 7 years. During the period, when he was the general manager of Robust Hubei, he often went to two stores on Jingwu Road in Wuhan to buy duck necks. The one named “Jingwu” was more spicy, and the one named “Jiu Jiu” was more fragrant. When going to Robust headquarters for meetings, Gu Qing always wears a duck neck from Wuhan. Every time less than half an hour, the duck neck will be wiped out.
It is addictive and unstoppable. Gu Qing thinks this is the super product power of duck neck. That’s why Gu Qing started the duck neck business.
After spending almost 400,000 yuan, the productivity of the factory came out. Half a year later, Gu Qing’s first store opened, but he made a mistake-he didn’t choose the right store location.
Because there is only a few hundred thousand yuan left in the start-up fund, Gu Qing stipulated that stores with a monthly rent higher than 1,500 will not be taken. The first store was opened in a vegetable market, and Gu Qing transported the goods by himself and stopped by himself. On the first day of the opening, Gu Qing’s duck neck was unpopular.
When he saw He Boquan, Gu Qing almost ran out of ammunition and food. He found out all the passbooks in the family, and it was only 4,000 yuan.
After dinner, He Boquan asked Gu Qing to drive to see the factory. On the way, He Boquan asked, how much money is needed? Gu Qing said frankly, 500,000. He Boquan nodded and said, “Okay, I will give you 500,000 yuan, and the shares are two points less than you. I will lend you the remaining money.”
Within a week, 500,000 yuan went to Gu Qing’s account. He Boquan holds 49% of the shares.
But Gu Qing then fell into another confusion. Should he continue to open stores and expand when he has the funds? He Boquan settled the account for Gu Qing, “The core of a chain store is whether a single store can make money. As long as a store can keep the balance or start to make money slightly, it can be opened.”
In 2003, “Jiujiuya” opened 16 directly-operated stores in Shanghai, with an operating income of 18 million yuan that year, and 40 million yuan the following year, 80 million in the third year.
In 2016, New Hope entered “Jiu Jiu Ah” at a price of 170 million yuan. He Boquan successfully cashed out and made a lot of money.
Through this help, He Boquan found that his thoughts and ideas are very helpful to young entrepreneurs:
First, I am very familiar with doing business and the growth process of a company from small to large. These are very useful for entrepreneurs.
There is a gap between me and them. Whether you have power or not, the key depends on whether you have a gap.
Second, many entrepreneurial failures are not a question of money, but his inexperience. For example, there is a stone in front of this road. It would have been very simple to cross over. But because he has no experience, he is likely to be really a stumbling block. Those with experience can see it right at a glance, and it is easy to go around or break it.
In 2003, Boquan Ho officially started doing angel investment. Today, the investment is registered and established in Metropolitan Plaza, Tianhe North Road, Guangzhou. The new company consists of three people, He Boquan, Shi Minjian (the former financial director sent by Danone to Robust) and a secretary.
Since then, He Boquan has never bought the shares of listed companies, nor has he set foot in the money-making opportunities of Pre-IPO. All investments are angel investments.
Experience and Failure
Based on He Boquan’s experience at Robust, he is instinctively more interested in industry and only invests in industries related to end consumers.
He set two guidelines for himself:
First, this model has a mature model abroad, but there is no precedent in China.
Second, only vote for the first round. For this company to succeed, it must earnestly perform well to attract VCs. (There are exceptions. He Boquan really likes Cai Dabiao’s real kung fu fast food, so he voted for the A round.)
In the first few cases, most of the partners He Boquan looked for were the former Robust department. On the one hand, it is because of the low cost of communication. On the other hand, Robust has always had this kind of entrepreneurial culture inside. He Boquan has always encouraged his subordinates to take the lead and boldly promote.
But soon, He Boquan broke this boundary, “If in a certain field, I happen to have an acquaintance who is very specialized in this field, then I will definitely choose him, but it is not certain, such as Zheng Nanyan and Ikang of the Seven Days Chain Hotel. State Guest Zhang Ligang, Noah Fortune’s Wang Jingbo”
He summarized the three criteria for voting:
One, half of the investment is looking for someone, but this person cannot be a professional manager.
Second, when I make investments, I never look at feasibility reports. For a newly founded company, his reports and data do not represent much.
Third, I judge whether this person is good or not, that is, whether he is willing to put all the money into this enterprise in addition to the basic living expenses of raising a house and supporting his wife and children. The money can be more or less. He must also invest money and use his actions to verify the feasibility of this project.
He Boquan has a clear boundary. He does not intervene in the details of business operations. Even if he sees a problem, he can control himself not to say it.
“Giving a brand new business model to one person will not go smoothly, but if I encounter a problem, I jump out and do it, and I will die faster and worse.”
In March 2005, the first store of the 7 Days Chain Hotel opened in an alley. Zheng Nanyan believes that traditional hotels are usually located on the side of a busy road, and the properties are expensive. The properties in the roadside alleys are much cheaper, but the 7 Days Hotel relies on a unique online booking system to attract customers. Guests will not come because the place is not easy to find.
In the five months since the store opened, the hotel room rate has always been below 30%. Zheng Nanyan feels a lot of pressure, but He Boquan can’t say anything about it. I’ll talk about it at the end of the year. Don’t care, don’t watch.
After half a year, the store finally became full, and He Boquan came to the store to take a look. He said to Zheng Nanyan: “Actually, when you chose the site, I was very opposed to it in my heart, but I didn’t talk to you.”
The golden rules and the jade rules are not always tried and tested. He Boquan had somersaults.
That is a project that seems to have all the elements for success. It has a successful demonstration in the United States, but has not yet started in China, and it is the field that Boquan He is most familiar with.
In 2004, an oral lozenge called Xiangkou Pian was rated as one of the top ten innovative consumer products in the United States and quickly became popular. This lozenge is as thin as paper, has a strong flavor, and is considered a substitute for chewing gum.
He Boquan is very optimistic. This is a consumer product he is familiar with, and its sales channels are connected to beverages. Moreover, the technical threshold is relatively high, and domestic production cannot be achieved. He quickly found a collaborator and started producing in the United States and selling it in China. The brand is called Kusha.
But everything is not going well: This product requires a lot of temperature. Because there is no strict quality control and logistics transportation system, the product melts and deforms during transportation. In addition, imitations made of glutinous rice paper have also appeared on the market.
The most terrible thing is that the general manager of the company (also the old department of Robust) told others that this was a project invested by Boquan Ho. As a result, many dealers placed large orders. When the problem broke out, the market was completely destroyed.
He Boquan kept in mind the warning of Professor Harvard and did not jump into the sea to rescue the “wreck” by himself. At the beginning of 2005, He Boquan resolutely stopped the project and lost several million. He has been keeping samples of the fragrant mouthpieces, the production date is 2005, and the expiration date is 2007.
Hanging in He Boquan’s office is a picture of the words: Look forward and backward, but forget about it. Warn yourself that you can always find in failure